There are several professional associations that endorse a company's disability insurance product, which results in a discount for all of their members. These discounts are usually 10% of the standard pricing. Typically, these associations are found in the medical, legal, accounting, and other professional fields.
To take advantage of one of these association discounts, the insured needs to be a dues-paying member and be able to demonstrate this to the insurance company at the time of application. Typically, the discount applied to the disability insurance policy will remain, even if the insured terminates their membership with the association at a later date.
It’s important to understand that association discounts on individual disability insurance plans are not the same as buying a policy sponsored by the association. Some professional associations offer a policy that they sponsor for their members. These policies are provided by an insurance company that has a relationship with the association, and usually do not contain the same provisions found in individual disability insurance plans.
Professional Group Discounts
A professional group is simply a number of employees at a single company that is applying for disability insurance with an insurance carrier. Usually, there need to be at least three employees to receive a discount of approximately 10%.
The employees apply and pay for their own policies and are fully medically and financially underwritten. Therefore, they can be turned down for coverage, which may affect the discount for the rest of the group.
A good agent will usually talk with their client about any other possible interest at the client’s place of employment to help their client save money through this discount. If you are applying for disability insurance, it could be worth your time to ask around at work to see if anyone else is interested.
Qualified Sick Pay Plans
The best way to get a discount on your policy, especially if you are a woman, is to have your employer pay for the coverage. If you are a business owner, buying a policy for yourself and a couple of your employees may save you a lot of money.
A Qualified Sick Pay Plan (QSPP) is simply a formal arrangement between an employer and employee to provide income replacement in the event of a disability. This income replacement is typically provided through a disability insurance policy purchased on behalf of some or all of the employees.
A little-known fact is that rates for DI for women are higher than for men. This has to do with the morbidity experience of the insurance companies. Anecdotally, female rates for life policies are less than male rates, as the mortality experience for women is lower. The discount for a QSPP is not only 10% but also unisex rates. This can amount to a savings of up to 30%-40% for insured women.
A good agent working with a female business owner is smart to ask if she wants to offer coverage to select employees as well. If she does, then the premium on her individual policy could be substantially lower than what she would have paid alone.
There is also a lower premium for those who do not smoke. While this is fairly well known, what is lesser known is that if you do smoke and do not qualify for this lower rate, you may still be able to get it in the future should you stop smoking. Most insurance carriers will apply the non-smoker rate to a policy that is in force if the insured can demonstrate that they have not smoked for twelve months and if their blood work indicates no nicotine is present.
Medical Resident Discounts
Medical residents may be eligible for a discount on disability coverage in addition to special limits on how much coverage is available to them. These discounts are set by agents who have a relationship with the hospital. The agent typically presents to residents each year to explain the importance of protecting their income and the benefits of buying a policy through the residency discount program.
A residency discount program will usually provide for a 10% discount.
Most insurance companies will offer a starting monthly benefit of $5,000 to medical residents, regardless of their current income. This $5,000 can be increased once the residents graduate and start earning more income. The discount that was applied to the original policy is maintained with any subsequent purchases, so buying through a residency discount program is a good value for those who have access to it.
Companies set the pricing of their disability insurance policies, and once approved by the state insurance commissioner, this pricing cannot be changed by the agent. The advent of the internet has allowed for much faster and more efficient shopping of policies; thus, agents who sell DI policies online have to be knowledgeable about the products and how to buy them at the lowest possible costs.
It is critical to work with someone who specializes in the sale of disability insurance and knows how to maneuver through the various options to get all applicable discounts available to you. The best agents have databases of these discounts and are always presenting clients with options to help reduce the cost whenever possible. If you’re shopping for a policy, and are just seeing a standard quote, be sure to ask what discounts may be available.
This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.
William Olmsted is a Registered Representative of Park Avenue Securities LLC (PAS). Securities products offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian. Financial Balance Group, LLC is not an affiliate or subsidiary of PAS or Guardian.